n-13-21.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Postponement of Deadline for Making an Election to Deduct for the Preceding Taxable
Year Losses Attributable to Hurricane Sandy

Notice 2013-21

PURPOSE
This Notice postpones until October 15, 2013, the deadline to make an election
under § 165(i) of the Internal Revenue Code to deduct in the preceding taxable year losses
attributable to Hurricane Sandy sustained in a federally declared disaster area in
Connecticut, Delaware, District of Columbia, Maryland, Massachusetts, New Hampshire,
New Jersey, New York, Pennsylvania, Rhode Island, Virginia, or West Virginia resulting
from Hurricane Sandy. This postponement is granted under § 7508A.
BACKGROUND
In late October 2012, Hurricane Sandy struck the east coast causing severe damage
in a number of states. The President of the United States issued major disaster and
emergency declarations under the authority of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, 42 U.S.C. §§ 5121-5206 (Stafford Act), for certain areas in
Connecticut, Delaware, District of Columbia, Maryland, Massachusetts, New Hampshire,
New Jersey, New York, Pennsylvania, Rhode Island, Virginia, and West Virginia. The
Federal Emergency Management Agency (FEMA) determined certain areas within those
states and the District of Columbia to be eligible for Public Assistance or Public Assistance
and Individual Assistance under the Stafford Act.

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Section 165(i) provides that if a taxpayer sustains a loss attributable to a federally
declared disaster occurring in a disaster area, the taxpayer may elect to deduct that loss on
the taxpayer's return for the taxable year immediately preceding the taxable year in which
the disaster occurred. For purposes of § 165(i), a federally declared disaster is a disaster
determined by the President to warrant assistance by the Federal Government under the
Stafford Act (including a disaster for which the President issues a major disaster declaration
or an emergency declaration), and a disaster area is the area so determined to be eligible
for such assistance. See § 165(h)(3)(C) and 42 U.S.C. § 5122.
Section 1.165-11(e) of the Income Tax Regulations requires a taxpayer to make the
§ 165(i) election by filing a return, an amended return, or a refund claim on or before the
later of: (1) the due date of the taxpayer's income tax return (determined without regard to
any extension of time for filing the return) for the taxable year in which the disaster actually
occurred; or (2) the due date of the taxpayer's income tax return (determined with regard to
any extension of time for filing the return) for the immediately preceding taxable year.
Section 1.165-11(e) provides that the return or claim should specify the date or dates of the
disaster that gave rise to the loss, and the city, town, county, and State in which the
property that was damaged or destroyed was located at the time of the disaster. The
election is irrevocable 90 days after the taxpayer makes the election.
Section 7508A provides the Secretary of the Treasury with authority to postpone the
time for performing certain acts under the internal revenue laws for up to one year for a
taxpayer affected by a federally declared disaster. Section 301.7508A-1(c)(1) of the
Regulations on Procedure and Administration lists several specific acts performed by
taxpayers for which § 7508A relief may apply, and § 301.7508A-1(c)(1)(vii) authorizes the

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IRS and Treasury Department to specify additional acts. Section 301.7508A-1(d)(1)
describes several types of affected taxpayers eligible for relief under § 7508A. Section
301.7508A-1(d)(1)(ix) authorizes the IRS to determine that any other person is affected by a
federally declared disaster and therefore eligible for relief. Under § 301.7508A-1(d)(2), the
area of a federally declared disaster for which the IRS has determined that the
postponement of one or more deadlines applies is referred to as a covered disaster area.
AFFECTED TAXPAYERS FOR WHICH THE SECTION 165(i) DEADLINE IS POSTPONED
Under the authority of § 7508A and §§ 301.7508A-1(c)(1)(vii) and 301.7508A-
1(d)(1)(ix), the IRS has determined that the areas that FEMA has determined to be eligible
for Public Assistance or Public Assistance and Individual Assistance pursuant to the major
disaster and emergency declarations issued in response to Hurricane Sandy are covered
disaster areas. A list of those areas is available at the Federal Emergency Management
Agency (FEMA) website at www.fema.gov/disaster.
Under the authority of § 301.7508A-1(d)(1)(ix), a taxpayer is an affected taxpayer to
which the postponement of the deadline for making the §165(i) election applies if: (1) the
taxpayer sustained a loss attributable to Hurricane Sandy; (2) the loss occurred in a
covered disaster area for Hurricane Sandy (regardless of whether the taxpayer’s principal
residence or principal place of business is in one of the covered disaster areas); and (3) the
deadline for the taxpayer to make a § 165(i) election for that loss, but for this notice, would
be before October 15, 2013.
Affected taxpayers for purposes of this notice are not affected taxpayers for
purposes of other relief provided by the IRS unless the taxpayer separately qualifies as an
affected taxpayer under other guidance issued by the IRS.

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GRANT OF RELIEF
Under the authority of § 7508A, the IRS grants affected taxpayers, as defined above,
a postponement to October 15, 2013, to make an election under § 165(i) for losses
attributable to Hurricane Sandy.
To assist the IRS in identifying affected taxpayers to ensure that they receive this
postponement of the deadline to make the § 165(i) election, affected taxpayers should
include a reference to this notice, Notice 2013-21, with their return, amended return, or
refund claim on which they are making a postponed § 165(i) election pursuant to this notice.
The return or claim should also include the other information requested in § 1.165-11(e).
This notice is limited to making an election under § 165(i) and does not affect the
application of any other section of the Code or the regulations.
DRAFTING INFORMATION

The principal author of this notice is Grace H. Kim of the Office of Associate
Chief Counsel (Income Tax & Accounting). For further information regarding this notice
contact Ms. Kim on (202) 622-7900 (not a toll-free call).